Confidential Stier Report - Teamsters Union

Ill.        INFORMATION PROVIDED TO THE IRB

Shortly thereafter, the IBT directed that information collected by the IBT investigative team relating to organized crime issues at Local 330 be turned over to the IRB. On September 5, 2003, a memorandum summarizing the IBT investigative team’s preliminary analysis of the 17 individuals identified by Degand was provided to the IRB. In summary, of the 17 individuals investigated, we identified: 4 organized crime members or associates; 5 who had possible organized crime associations; and 7 individuals about whom we had insufficient information to establish an organized crime connection. Significantly, all four of the organized crime members or associates have had involvement in labor union matters (see Confidential Appendix, Tab 12).

Since that time, IBT field representatives on an unsolicited basis continued to receive information relating to Romanazzi’s possible organized crime associations⁹ In December 2003, Romanazzi was elected president and principal officer defeating slates led by Degand and Shales. Field representatives have also received confidential information that an individual recently hired as a steward by Romanazzi may have ties to organized crime.¹⁰

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ISSUES RELATING TO THE USE OF NONUNION LABOR
AND ITS CONNECTION TO ORGANIZED CRIME

Investigations of IBT locals in the Chicago area since the completion of the Project RISE field study revealed labor practices having serious implications for the Teamsters. These practices, though diverse in their details, have three common components. In each case: the practices take jobs away from Teamster members or decreases Teamster wages and benefits; a financial benefit runs to a relative, friend, or associate of a Teamster official; and the practice can be traced, directly or indirectly, to a company with ties to organized crime. Union officials facilitated these practices by failing to enforce contracts, acceding to substandard contracts^, or failing to organize. In combination, these components threaten the integrity of the IBT at the local and international level.

As discussed below, the result of these practices is that Teamster employers use a workforce that is partially or entirely made up of nonunion workers earning wages substantially below union scale. The nonunion workforce may be hired directly by the employer or supplied by companies engaged in the business of providing temporary laborers. In some cases, these arrangements exist in violation of a collective bargaining agreement. In other cases, they exist apparently without violating the terms of the agreement—jobs that might otherwise be covered by a collective bargaining agreement are excluded from bargaining units (by definition or practice), or provisions in the collective bargaining agreement allow the employer to legally circumvent the union and use nonunion labor. Regardless of the wage rate at which the employer pays the nonunion laborers the employer still bills at a set rate.

I           BACKGROUND

The practices discussed in this memorandum are not new to the Teamsters.

Local 326, headquartered in New Castle, Delaware, was plagued by a corrupt labor leasing scheme in the 1970s when businessman Eugene Boffa  used sham companIes to put Teamster employees in one of his companies out of work while using nonunion employees in another of his companies to perform the same work. Boffa’s scheme was facilitated by the local’s principal officer, Francis Sheeran, who was heavily involved in organized crime and was ultimately convicted for his role in the scheme.¹

A labor leasing scheme designed to decrease wages paid to Local 560 members was prosecuted in New Jersey in the 1980s. Walsh Trucking Company and its owner, Frank Walsh, had mob ties that included organized crime figure Michael Sciarra, who was a Local 560 officer and was ultimately barred from the union as a result of IRB charges. Walsh acted as middleman in the labor leasing scheme. His company employed warehouse workers — members of Local 560 — and leased them to a retail distributor. A corrupt labor official, the infamous Tony Provenzano, agreed to a 25 percent reduction in Teamster wages in return for payoffs from Walsh. Both Walsh and Provenzano were ultimately convicted of crimes. Walsh attempted to perpetrate a similar scheme in Philadelphia in 2001 involving an IBT vice president who resigned to settle charges filed in connection with this scheme. A confidential source advised that, at the behest of MIchael Sciarra, Walsh attempted to arrange a labor leasing deal with a Philadelphia retail distributor, but the scheme collapsed before it could be executed.²

Efforts to force Las Vegas Local 631 into a contract that would result in the loss of Teamster jobs to nonunion laborers was thwarted with the debarment in 2002 of William T. Hogan Jr. and Dane Passo. Hogan and Passo colluded with mob-linked Richard Simon, owner of a temporary labor company, United Services, in an effort to cause Local 631 to enter into a substandard contract with Simon. For a discussion of the details of this scheme, see Appendix, Tab 8.

1. CURRENT PROBLEMS

The substitution of nonunion labor for union labor and the execution of substandard collective bargaining agreements is an ongoing and, by some witness accounts, a growing problem. These conditions present a significant threat to the IBT, for several reasons, not simply because of the loss of union jobs and wages. In each of the situations discussed below, mob-controlled companies are earning profits at the expense of Teamsters.

1. Displacement of Teamsters by Organized Crime-Tied Temporary Labor Companies

Consistent with the pattern described above, preliminary investigation of Local 714 has revealed the use of nonunion labor supplied by companies with ties to organized crime. Moreover, investigation of Local 714 has established connections to the same companies involved in the corrupt scheme Hogan and Passo attempted to perpetrate on Local 631.

Although the IRB is currently investigating issues relating to Local 714, the nonunion labor issues described below are discussed here because intelligence sources indicate that the practices extend beyond Local 714. Additionally, as discussed in another appendix to

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this report (Appendix, Tab 8), Hogan, Local 714’s former principal officer, apparently continues to have influence throughout Joint Council 25.

1. Rosemont Exposition Center

Local 714 maintained collective bargaining agreements with trade show contractors handling trade shows at Rosemont Exposition Center and McCormick Place in Chicago. Rosemont Exposition Center has agreements with Rosemont Exposition Services (RES), a private trade show contractor, which covers a range of jobs at the trade show center. According to RES’s 2000 collective bargaining agreement covering several different categories of workers, when the union was unable to fill a request for employees covered by the agreement (Referral Employees), the employer could hire workers not covered by the agreement. In addition, RES was free to hire “casual employees” on an “irregular and temporary basis,” however, RES was required to “endeavor . . . to insure” that the casual employees did not perform the work of the Referral Employees.³ According to an RES agreement that covered drivers, when RES needed additional men, it had to “give the Union equal opportunity with all sources to provide suitable applicants, but shall not be required to hire those referred by the Union.”⁴

Although job descriptions were not explicit in the RES contract, it was generally understood that the job of moving furniture during the set up and break down of exhibits was covered by the agreement. When interviewed, several union members reported that RES used a company known as “Surestaff to provide temporary nonunion workers for this job even when Teamsters were available. Surestaff’s temporary workers were paid a rate substantially below union scale, approximately $5.00 to $6.00 per hour, allowing the

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owners of Surestaff to make a substantial profit even while charging RES less than the approximately $21.00 per hour plus benefit payments required in the RES contract with 714. The union members stated that Teamsters received only about one-third of the jobs at Rosemont that should have been performed by Teamsters.⁵ Another Local 714 member estimated “that two-thirds of the workers doing Teamster work at Rosemont [were) temporaries hired through an agency.”⁶

The willingness of Local 714 officials to allow RES to circumvent the collective bargaining agreement at the expense of their members can be directly traced to Michael P. Hogan, brother of William Hogan Jr. This is the same Hogan brother who held a financial interest in United Service Companies with Richard Simon in the case against Hogan and Passo involving Local 631. (See Appendix, Tab 8.) Michael P. Hogan Sr. was originally an owner of record of RES. Beginning in 1985, a series of complicated changes were undertaken by RES, including several changes in its corporate name and ownership, as well as the incorporation of new entities that ultimately resulted in a company named “Rosemont” that continued to do the same work as RES. For simplicity sake, we continue to refer to the company here as RES. Michael P. Hogan retained a 20 percent interest in the new firm; the remainder of the corporate interests were retained by several investors, including Mark Stephens, son of Rosemont Mayor Donald Stephens. Stephens — who was listed as an officer of RES — was also an owner of Bomark Cleaning Services, Inc., in partnership with Nick Boscarino, a former Local 714 member and chief steward who is believed to have ties to organized crime (see discussion below regarding Boscarino).⁷

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Under the arrangement described by Local 714 members, RES and its principals – who may still include Michael Hogan Sr. and Stephens — increased their profits and Surestaff, the labor supplier, grew its business. In keeping with the pattern, Surestaff had direct ties to organized crime through its founder Louis A. Morelli who died in 1998. Morelli’s sons now own the company: Louis J. became the registered agent and Raymond S., its owner/operator. Beginning in the late 1980s, Louis A., the founder, had associations with Chicago Outfit members. He was observed leaving the Elmwood Park Social Club with Outfit member Marco D’Amico and on another occasion, “driving D’Amico around in Morelli’s Rolls Royce.” Morelli sold a health club he owned, which was frequented by Outfit Lieutenant Joseph (the Clown) Lombardo and other Outfit members, to Lombardo’s brother, also an Outfit figure. Morelli and his sons purchased property in a complex in which other organized crime members and associates owned property, including William and Salvatore Galioto.⁸

In 2003 Raymond Morelli was frequently observed in the company of Chicago Outfit associates, including Chris Spina, at places frequented by organized crime figures. For example, he was observed picking up Spina in his car after following him from his home to a location where one car was dropped off. On another occasion, he had breakfast with Spina at a café where a confidential source observed them together three days in a row.⁹ (For a discussion of Spina’s organized crime ties, see Appendix, Tab 11.)

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2. McCormick Place

As at Rosemont, Local 714 had collective bargaining agreements with trade show contractors operating at McCormick Place. Unlike the situation at Rosemont, no one general contractor had exclusive control over trade shows at McCormick Place.

Freeman Decorating was a major trade show contractor operating at McCormick Place. Local 714’s contract with Freeman is believed to have encompassed furniture moving jobs. Witnesses have stated that at McCormick Place, as at Rosemont, nonunion labor is used to perform this work even when Teamsters were available, notwithstanding Teamsters’ contractual entitlement. For example, “if Freeman needed 10-15 freight handlers, only one or two would be Teamsters,” the others were low paid temporary or part-time labor.¹⁰

A primary supplier of nonunion labor to Freeman appeared to be Minute Man Temporary Services, owned by Samuel G. Lucarcelli Jr. who reputedly has been associated with organized crime in Cleveland. Lucarcelli pleaded guilty to criminal RICO charges in the late 1980s. The former chief investigator for the Chicago Crime Commission stated that Lucarcelli continues to associate with mob figures in Cleveland and Chicago.¹¹

GES, the trade show contractor involved in Hogan’s and Passo’s scheme to circumvent Local 631 and use nonunion labor in Las Vegas, was also a primary trade show contractor at McCormick Place.¹² The involvement of GES in the trade show industry in Las Vegas and Chicago highlighted the fact that corrupt labor schemes transcend local union boundaries.

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The IRB’s report in the Hogan and Passo case indicated that, during the period Hogan and Passo were attempting to force Local 631 into a contract with United, Hogan met with two of GES’s Las Vegas area representatives. The meeting took place in January 2001 at a restaurant in Chicago. Present at the meeting were Hogan, the GES representatives, and Robert Hogan, principal officer of Local 714. According to Hogan (as described in the IRB’s report), the GES representatives requesting the meeting traveled from Las Vegas to Chicago to complain to Hogan (who, along with his son Robert, had no jurisdiction in, or authority over, Local 631) about the grievances Local 631 had filed concerning GES’s use of United’s nonunion employees. GES purportedly complained that Local 631 was unable to supply enough workers and sought Hogan’s advice. In response, Hogan claimed he stated: “`I don’t have a clue. You figure that out on your own.”‘ According to the IRB report, “Passo knew that GES used United employees at `scab rates’ and told Hogan about this.” Yet, they made no effort to stop it. Instead, Hogan and Passo lobbied the other major trade show contractor to use United at its lower rates.¹³ How much of this Robert Hogan was aware of, given GES’s major role in the Chicago trade show industry, is to be determined.

A Local 714 member stated that Local 714 officers had done nothing to prevent Local 714 employer Jorgenson Steel Company from “hiring part time employees ‘off the street’ while full time members of Local 714 were being laid off.” In addition, he reported Local 714 members were no longer given maintenance work they had previously performed on an overtime basis; instead, that was given to a maintenance company formed by a former company employee.¹⁴

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Two other Local 714 member/employees of Jorgenson also stated that work they previously performed for Jorgenson, cleaning machines on overtime, is now being performed by a temporary labor company, Elite Staffing. Jorgenson management indicated they want to out source all maintenance work. These members voiced their concerns to their business agent, who said he would look into it, but, according to the members, will do nothing.¹⁵

Investigation uncovered another labor-related problem at Local 714 — exclusion of certain jobs from collective bargaining agreements. The IRB’s 1996 trusteeship report concerning Local 714 touched upon this issue. For example, Local 714’s collective bargaining agreement with trade show contractors, like Freeman, GES, and RES, “exclude[d] from coverage the workers who handled the moving and storing of the empty crates.” These unclassified employees were not unionized. Bomark Cleaning Service was one company that provided nonunion “workers to handle empty crates at the Rosemont Exposition Center.” Bomark was owned by Nick Boscarino who, before he resigned from the union, was chief steward at Rosemont, and Stephens, who, as explained above, was also an owner of RES. Boscarino has had along and close relationship with members of the Hogan family, Michael P. Hogan, Sr. in particular. ¹⁶ True to the pattern, since at least 1996, Boscarino has been linked to organized crime. In a 1996 New York Daily News article, Boscarino was characterized as “a former Chicago Teamster official with reputed mob ties,” and stated that one of Boscarino’s companies, Eastern Rentals, had been thrown out of New York’s Jacob Javits Convention Center. In 2001, articles in Chicago

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newspapers linking Boscarino to organized crime resulted in the revocation of a license issued to a group of investors, including Boscarino, to build a casino in Rosemont.¹⁷

Boscarino has a close relationship with William Daddano Jr. and his family, Boscarino and William Daddano Jr. were owners and officers in American Trade Shows. Boscarino was also an owner (along with his then minor daughter) and president of OG Services, a forklift and scooter rental company. OG Services employed Bee Consulting, and Boscarino testified he dealt with William Daddano Jr., who had been linked, since the early 1960s, to the Chicago Outfit. One newspaper article reported that William Daddano, Jr., a known Chicago Outfit figure, was a director of OG Services.¹⁸

Empties, Inc. provided nonunion workers to trade show contractors for the movement of empty crates at McCormick Place. Empties was owned in part by Ronald Maxwell Jr., nephew of William Hogan Jr. and cousin of Robert Hogan, who was listed as president and officer of Empties. Empties obtained its workers from temporary labor service companies, including Readymen and Labor World, Inc. These workers received minimum wage.¹⁹ Illinois corporate records revealed that Louis A. Morelli founded Labor World, Inc. in 1974.²⁰ Morelli’s organized crime ties are described above.

Michael Hogan Jr. testified to the IRB that “United Maintenance arranged for … Readymen [] to provide [temporary] workers to handle the empty crates at McCormick Place.” United Maintenance was a subsidiary of United Service Companies, which was at the center of the corrupt scheme with Hogan and Passo to take work away from Local 631 members in Las Vegas. Michael Hogan Jr. also testified that his father worked for United Maintenance.²¹ As previously noted, Michael Hogan Sr. had a financial interest in

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United Service and Richard Simon, manager and chairman of United Service Companies, has ties to organized crime (see Appendix, Tab 8).

During the course of the investigation leading up to the trusteeship, Local 714 officials were asked why workers who handle empty crates at Rosemont and McCormick were not within the jurisdiction of Local 714. Robert Hogan, then trade show business agent, and James M. Hogan, then president, responded that they did not know why these workers were nonunion, but they “`always” were. William Hogan Jr. testified that the industry is “‘extremely competitive’ and “`[i]f you build too much cost in they will take their shows to other cities. So to have that work done by all Teamsters would be extremely expensive and probably chase the work away.” Robert Hogan testified they “never sought to represent these workers.”²²:

1. Hired Truck Program

Organized crime figures were involved in replacing Local 726 members with nonunion labor. Local 726 represents approximately 5,000 public employees in the Chicago area. The local is party to multiple contracts with the City of Chicago covering various collective bargaining units. The City of Chicago employed career (permanent) and seasonal employees — Local 726 members — who drove trucks and operated machines for various municipal departments. As a supplement to its career and seasonal drivers and its city-owned truck fleet, the City created the “Hired Truck Program” (HTP), which allowed the Departments of Transportation (DOT), Water Management, and Streets and Sanitation “to hire trucking services on an as-needed basis to supplement construction projects and daily operations.” The program has been administered through the City’s budget

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department. ²³ Angelo Torres headed HTP from 1998 until 2003, when he was transferred and subsequently fired following a major scandal revealed by the Chicago Sun-Times investigative expose referenced below_.²⁴

Each department participating in the program had its own contact person. Until he retired in June 2002, DOT’s contact person was Nick Lococo, who determined which trucking companies would receive DOT’s business. A former Local 726 member, Lococo has been linked to organized crime. He had two arrests for gambling-related activity in 1979 and 1986, neither of which resulted in convictions. A 1987 Chicago Tribune article reported that Lococo was shot while demanding payment on a “‘mob juice loan.”‘ A mob attorney-turned-informant reported that top echelon mob figure Angelo LePietra, now deceased, had arranged for him to represent Lococo in a gambling case. Current intelligence information reveals that Lococo is a well known member of Chicago’s 26th Street Crew, engaging in mob loan collections and bookmaking.²⁵

In court filings relative to a federal criminal case in the Northern District of Illinois, United States v. LaMantia, Lococo was identified as a person who, along with other organized crime figures, used the Old Neighborhood Italian American Social Club to transact illegal business. Electronic surveillance of the telephones at the revealed calls to Lococo .²⁶

Prior to his retirement from Local 726, Lococo held the position of general foreman of motor truck drivers for DOT and was responsible for assigning truck drivers within the department. When Lococo retired, Charles Scalise replaced Lococo as the contact person for the HTP. As of April 2004, Scalise was not a Teamster.²⁷

Members of Local 726 stated that the City had increasingly utilized private trucking firms with nonunion drivers to perform work traditionally carried out by truck drivers employed by the City. When the HTP began, the City’s use of private trucking was minimal, however, the program expanded rapidly over the past few years and has had a significant impact on Local 726. Members claimed that they were often sent home from a job or laid off while private companies and their nonunion drivers continued to work. The companies were charging the City union rates for drivers, but the drivers were only being paid. $10.00 per hour.²⁸

A contract for the July 1999 through  June 2003 time period between the City of Chicago and Local 726 that covered truck drivers and related job functions contained two provisions relevant to the City’s use of nonunion truck drivers. Article 14 provided that, with certain exceptions, “[a]ny work which has been traditionally performed by employees who are represented by the Union shall continue to be performed by said employees.” Article 2 of the contract, however, recognized that certain “rights … are exclusively vested in the Employer, except as they may be subject to specific and express obligation of this Agreement,” including “the right to contract out or subcontract; [and] the right to determine the number of employees and how they shall be employed.^“ 29 Assuming that the work performed under the HTP falls within the scope of work traditionally performed by Local 726 members, under Article 2 the City retained the right to contract out such work without limitation. According to at least one Local 726 member, under the HTP, the City paid the contractors rates commensurate with union scale even though the contractors were not

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obligated to hire union members. Private trucking companies operating under this program billed the City at union rates, having paid their nonunion drivers well below union scale.³⁰

A current Local 726 official, however, estimated that Local 726 members lose 130 jobs per day to nonunion drivers operating under the HTP. He further stated that, because Local 726 was a municipal local, it did not have jurisdiction to organize nonmunicipal employees. According to this official, the matter was referred to IBT Locals 731 and 786. He was under the impression that Local 731 had begun to organize, with a few cards signed, but nothing ever came of it.³¹ However, Local 726 Principal Officer Thomas Clair implied that it was possible that no organizing had occurred. He asserted that former Local 726 secretary-treasurer Daniel E. Stefanski talked to a Teamster official, most likely from Local 731, about organizing the HTP drivers. Following Stefanski’s contact, Clair made arrangements to meet with a Local 731 business agent or organizer to discuss organizing these nonunion drivers, but the Local 731 representative never showed up for the meeting and he did not pursue it.³² In addition, a confidential source whose credibility has not been determined reported in August 2003 that Marina Cartage, the highest-paid participant of the HTP, was making payments to a Chicago local union officer not to organized Marina Cartage’s employees.”

The Illinois Prevailing Wage Act (IPWA) reflects Illinois’s policy that requires that all individuals employed by or on behalf of any public body engaged in public works be “paid no less than the general prevailing hourly rate” for similar work.³⁴ Members of Local 731 filed a complaint against the Illinois Department of Labor (IDOL) for failing to require that companies hired under the HTP pay their employee drivers prevailing wage rates, as is

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required by the IPWA.³⁵ The IDOL refused to enforce the IPWA against the companies working under the HTP stating that it was “[i]n keeping with former [IDOL] Director Healey’s promise that no trucking company would be bankrupted from participation in this program.”³⁶ The court dismissed the complaint, finding that the IDOL has the discretion to decide whether to file charges under the IPWA. An appeal of the dismissal was filed on May 30, 2003.³⁷

Local 726 Principal Officer Clair was questioned about Nick Lococo. Clair testified that, after he took over as principal officer of Local 726, Lococo telephoned to congratulate him and suggested they have lunch together. Clair had heard that Lococo was involved with organized crime. To avoid meeting with Lococo, he said he was “`too busy.”‘ According to Clair, he stated he has since received telephone calls from Lococo but has not returned them. Before his retirement, Stefanski told Clair “`you’ve got to learn to deal with these people,”‘ which Clair understood to mean “the mob.”³⁸

With respect to the HTP, a Local 726 member stated he had heard that that trucking companies paid kickbacks to Lococo in return for being awarded work under the program. Although this member had no personal knowledge regarding Lococo’s handling of the HTP, his personal knowledge of Lococo regarding a separate but similar corrupt scheme lends credence to the allegation. He testified that Lococo, while general foreman of the truck drivers for the DOT, solicited “Christmas gifts” from Local 726 members in return for making sure those members were assigned overtime hours. This member testified that he gave Lococo $500.00 each year for eight or nine years until Lococo retired. These gifts

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to Lococo were openly discussed among the members — “Everybody did it.”³⁹ This and related corrupt schemes concerning Local 726 are discussed in the Appendix, Tab 1.

This member further stated that after he was laid off in April 2003, he contacted a steward who he characterized as a personal friend, to find out why he was laid off. He noted that other people with less time on the job were still working. The steward told him that the member “`didn’t do the right thing’ at Christmas time 2002,” which he understood to mean that he did not make a payment to Lococo’s replacement, Senese.⁴⁰ A confidential source stated that he heard from a Teamster on leave of absence that a Coalition for Better Government leader had acted as a “bagman” for Lococo (see Appendix, Tab 1).⁴¹

Beyond the organized crime connections of Lococo and Senese, preliminary investigation of certain trucking companies doing business under the HTP has revealed an alarming number of connections to organized crime. Marina Cartage was the number one company participating in the HTP in terms of gross revenue.⁴² Michael Tadin was the president and owner of Marina Cartage and was a close personal friend and “longtime political supporter” of Chicago Mayor Richard M. Daley; they grew up together in the Bridgeport neighborhood of Chicago, an area also known as 26th Street and recognized as the center of operations for the Outfit’s 26th Street Crew. Tadin reportedly had ties to Chicago Outfit figures. Attorney Charles Schneider was the registered agent for Marina Cartage and other companies owned by Michael Tadin. Schneider was convicted for his involvement in a widely reported corruption trial involving the Chicago Outfit and the Town of Circero.⁴³

Barbara Trucking has also been identified as a major trucking company operating under the HTP. Barbara Trucking is owned by Fred B. Barbara, an individual identified since at least 1983 as a member of the 26th Street Crew. Barbara and Tadin are believed to be partners in two other trucking firms, CMT Enterprises and T & B, Ltd. A Local 726 official stated that Marina Cartage and Barbara Trucking supply most of the nonunion trucks and drivers hired by the City. Barbara is believed to be “the nephew of the late Alderman Fred Roti, a made member of the Chicago mob.^“44

Lori LaMantia worked for the City’s budget office which runs the HTP. She was married to convicted felon Rocco (Rocky) LaMantia and was the daughter-in-law of Joseph (Shorty) LaMantia, a member of the 26th Street Crew. Joseph LaMantia was one of the defendants in the criminal RICO case in which Nick Lococo was identified as a person engaging in illegal business at the 26th Street Social Club (see discussion above). Rocky LaMantia “helped create Dialex Trucking,” an HTP company that earned over $420,000.00 from the program in 2002.⁴⁵

According to electronic database sources, Lori LaMantia had two reported addresses in the 26th Street neighborhood. One was the address of Anthony Pacella, brother of William Pacella who owned Pacella Trucking, an HTP company. William Pacella was believed to be partners in a trucking company with Fred Barbara, owner of Barbara Trucking and 26th Street Crew member. Reliable sources indicated that Barbara was a close associate of Joseph LaMantia. Lori LaMantia was also linked to a second address, which was the reported address of Anthony J. Serritella, who was identified by sources as a member or associate of the 26th Street Crew.⁴⁶

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According to the Chicago Sun-Times investigation, James Inendino was a principal in JMS Trucking Co., a firm that had been operating in the HTP. Inendino was convicted in March 2002 with “the reputed mob boss of Cicero at the time, Michael Spano” (see discussion of the Spanos in Appendix, Tab 9), and the former Cicero police chief for having “laundered bribe money from a Cicero kickback scheme.” JMS remained in the program until it was suspended in January 2003. JMS shared a garage and one employee with Ana Orona, who identified herself as the president of Builder’s Trucking Co., which also participated in the HTP. Orona had “personal and business ties to convicted loan shark and reputed mobster James Inendino., “⁴⁷

The Sun-Times investigation also identified Chica Trucking, Inc. as a participant in the program. Chica Trucking is owned by Patricia Cortez, sister-in-law of Chris Spina, “a former city worker once fired for chauffeuring reputed mob boss Joseph `the Clown’ Lombardo on City time.”⁴⁸

Dispatch Services, Inc. also participated in the HTP, having received over $1.3 million from the City between 1993 and 1997. These payments were evidence in the trial in which John LaGiglio, president of Dispatch Services, was convicted along with Cicero town president Betty Loren-Maltese and reputed Cicero mob boss Spano, Sr. of racketeering for swindling Cicero out of millions of dollars.⁴⁹

Schadt’s, Inc. was also among the companies doing business under the HTP. Schadt’s was owned by Carmen Schadt Gurgone, sister-in-law of Michael A. Gurgone, who had been identified as being affiliated with the 26th Street Crew of the Chicago Outfit. Michael Gurgone had been a driver for Chicago’s Department of Streets and Sanitation.

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Gurgone was sentenced to seven years in jail for attempted burglary of $600,000.00 in 1983. When he got out, Gurgone was hired by Tadin of Marina Cartage as a driver. In 2004, Gurgone stated that he still worked for Tadin. Schadt’s, Inc. leased between 8-to-12 trucks from Tadin, and paid Tadin 80 to 88 percent of its gross revenues. Gurgone and Tadin claimed these trucks were not used in the program. STR Enterprise, Inc. also participated in the HTP. STR is owned by Rhonda Vasquez, who was reportedly married to Samuel M. Gurgone, brother of Michael.⁵⁰ Schadt’s earned $396,562.00 in the first 10 months of 2003 through the HTP. STR earned $132,875.00 in the same time period.

At least three participants in the HTP were identified as Local 786 employers. Bridget’s Trucking, Inc., Harmon’s_. Motor Service, Inc., and Josh Transport, Inc. Although each was listed as a Local 786 employer, no Local 786 members working for these companies were identified.⁵¹

The January 2004 indictment of Torres, former head of the City’s HTP, and the Chicago Sun-Times expose referenced above revealed that the HTP was corrupt at every level. Torres was charged with attempted extortion for accepting “$3,800 in a series of separate payments” from a HTP trucking company in return for which “Torres agreed to steer at least $50,000 in city business” to the company.⁵² Torres, a former member of a “`Mexican street gang[]”‘ known as the, “Two Six,” was accused in the Sun-Times series of allowing his father-in-law and mob-connected individuals to participate in the HTP.⁵³ The Sun-Times investigation revealed that “bribes were passed to reserve a spot in the program; some contractors had ties to organized crime; [and] 25 percent of all Hired Truck money had been spent on firms operating out of the 11th Ward, Daley’s political power

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base. A 1998 audit of the program by Ernst & Young found that there were “`few controls over the program to prevent bribery.” In addition, Mayor Daley’s brother sold insurance to some of the Hired Trick Program’s biggest beneficiaries, including Marina Cartage and MAT Leasing, both owned by Tadin, and Fred Barbara and his wife’s trucking company, Karen’s Cartage.⁵⁶ Companies routinely were paid to have “trucks do little or no work” at the job site⁵⁷

The Sun-Times investigative series confirmed our preliminary investigative findings and supported two points significant to Teamsters: companies benefitting from the $40 million per year HTP “pay their drivers much less than the city pays its union drivers” and many of the companies involved in the program (one in ten according to the Sun-Times) was “either owned by alleged mobsters or Outfit associates or by family members, often women, of reputed mob figures.”⁵⁸

According to a confidential source, there was concern among rank-and-file Teamsters over the mob-related corruption of the HTP. This source claimed that he and other city employees represented by the same Chicago-area local had information to provide to the City of Chicago’s Inspector General’s office regarding the HTP, but they all feared some sort of retaliation if they did.⁵⁹

III.     SUMMARY

Preliminary investigations of various Chicago-area locals have uncovered evidence of schemes including: corrupt labor practices that are taking jobs away from Teamsters; union officials whose family, friends and associates are benefitting from these corrupt practices; and organized crime figures linked to companies replacing union members with

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nonunion workers. The apparent pervasiveness of this pattern across locals requires a broad investigative approach. A personal representative is necessary to conduct the broad-based comprehensive investigation that is required to confront this problem.

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ISSUES RELATING TO WILLIAM T. HOGAN JR.’S
CONTINUING INFLUENCE OVER CHICAGO-AREA TEAMSTERS

Allegations made and information received during the course of various investigations conducted following the Project RISE field study indicate that William T. Hogan Jr. (Hogan), despite his permanently barred status, continues to have influence over Teamster affairs in the Chicago area. Hogan’s continuing influence poses a threat to the union. Investigation is necessary to determine whether and to what extent Hogan continues to have ties to and influence over Teamsters and, concurrently, whether and to what extent he has ties to organized crime. Appointment of a personal representative is necessary to facilitate investigation of these matters, more particularly, to determine:

• Whether Hogan is participating in efforts to shut down the IBT’s anti-racketeering program;

• Whether Hogan has engaged in prohibited associations with Teamster members;

• Whether Hogan continues to have influence over Teamsters in the Chicago area and whether he has contacts with associates of organized crime;

• Whether Hogan is involved with Teamsters in the receipt of kickbacks or other corrupt deals; and

• Whether Hogan is involved in facilitating contracts that replace Teamsters with nonunion labor.

1. I.BACKGROUND

Local 714 has operated under the control of the Hogan family since it was first chartered in approximately 1939. William Hogan Sr. served as secretary-treasurer and principal officer from 1940 through 1990. Upon William Hogan Sr.’s retirement, his son, William T. Hogan Jr., was appointed to replace him. In 1993 Hogan was selected as

president of Joint Council 25 to replace Daniel Ligurotis who had been barred by the IRB for misconduct and was viewed as one of the most powerful Teamsters in Chicago.

On August 5, 1996, the IRB recommended Local 714 be placed in trusteeship and an emergency trusteeship was imposed three days later based on the IRB’s findings that, particularly in the trade show and movie division, nepotism, favoritism, and conflicts of interests among Hogan and his family members were rampant. Hogan’s relatives owned businesses that were dependent for profits on Local 714 employers, and these business interests were not disclosed to members. Sham collective bargaining agreements allowed non-employees to become Teamsters. The IRB concluded that Local 714 was run for the benefit of Hogan; his brother, Local 714 President James M. Hogan; his son, the recording secretary, Robert A. Hogan; and their family and friends. Upon imposition of the trusteeship, Hogan was suspended from office. In June 1998, elections were held and Hogan’s son, Robert A., was elected president. In July the trusteeship was lifted. President Robert A. Hogan appointed his uncle, James M. Hogan, to the newly created position of administrative director and later appointed his father organizing and government relations director of Local 714. In March 2000, Hogan was again appointed president of Joint Council 25.

Disciplinary charges were brought in 2001 against Hogan and former International Representative Dane Passo for participating in a scheme detrimental to Local 631. The charges resulted in a May 29, 2002 IRB order permanently barring Hogan and Passo from the lBT. The IRB found that Hogan and Passo colluded with Richard Simon, chairman and manager of United Service Companies, to cause Local 631 to enter into a substandard contract with United. United has three subsidiaries, one of which, United Maintenance, is

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discussed below. As noted elsewhere in this appendix (see Tab 7), United is in the business of providing nonunion labor to trade show contractors operating in Las Vegas, Chicago, and other locations. Hogan’s brother, Michael P. Hogan, is vice president of United.¹

The standard contract between Local 631 and trade show contractors required that all workers dispatched from Local 631, including nonunion workers, be paid union scale. The contract Hogan and Passo attempted to force on Local 631 would have allowed trade show contractors to avoid the union and go directly to United as a source of nonunion labor that would be paid substantially below union scale. Show Biz USA was among the trade show contractors operating in Las Vegas. Michael P. Hogan was CEO of Show Biz USA, as well as vice president of United. Through United and Show Biz, Simon and Michael Hogan would benefit, to the detriment of Local 631 members.²

Richard Simon has ties to organized crime and is a longstanding business friend of Hogan. Simon is the registered agent and manager of National Facilities Maintenance, LLC. Also listed as manager of this company is William Daddano Jr., who was identified by law enforcement as being affiliated with the Outfit since at least the early 1960s and was identified as such as recently as 2001.³ In addition to being in business with Simon, Daddano had connections to Chicago-area Teamsters through Local 714, including former Local 714 chief steward Nick Boscarino. Daddano and Boscarino were involved in a company known as “O.G. Services,” which did business with Local 714 employers.⁴

Simon was a close associate of deceased Outfit figure Ben Stein, founder of United, who pleaded guilty to bribing a labor official in the 1960s and was reported to have ties to Outfit member and barred Teamster Dominic Senese. Simon worked closely with Stein

Simon was a close associate of deceased Outfit figure Ben Stein, founder of United, who pleaded guilty to bribing a labor official in the 1960s and was reported to have ties to Outfit member and barred Teamster Dominic Senese. Simon worked closely with Stein

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for 30 years. As of 2003, the IRB stated that Stein’s daughter Carol owned the company, but Simon claimed he is a co-owner.⁵ The arrangement that Hogan, Passo, and Simon attempted to force on Local 631 was similar to the schemes Stein had been involved in previously.

Local 714 was among the locals included in the Project RISE field study because organized crime-related charges had been brought against a member. It was categorized as a C local — for locals being investigated or requiring an investigation — at the conclusion of the study because of (1) possible improprieties between the local’s bank and Hogan, other Local 714 officials, and Hogan’s relatives, and (2) possible organized crime associations involving Robert A. Hogan and other Local 714 members. Investigation subsequent to the field study uncovered additional issues of concern involving Local 714, Including other possible organized crime connections. Those issues were referred by the IBT to the IRB for further investigation.

1. II.   CURRENT ISSUES

Investigations involving various IBT locals in the Chicago area following the completion of the field study have revealed broad issues of concern to Teamsters throughout the Chicago area. One such concern is the nature and extent of William Hogan Jr.’s continuing influence over Teamster affairs.

1. Whether William Hogan Jr. Is Participating in Efforts To Shut Down the Anti-Racketeering Program

As recently as February 2004, a former member of Joint Council 25’s executive board stated that he believes that Hogan still runs the joint council, although John Coll is ^“technically the head of it.”⁶

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In 2003 a former Local 786 official stated that a current 743 official informed him that the Chicago Outfit was using Hogan and John Coll to get the executive assistant to the president, Carlow Scalf to shut down the investigation of Local 786 On another occasion. this former official stated that all IBT officials in Chicago are puppets for the ‘Outfit’ and do as they are told,” including Hogan and Coll. He also claimed that “the ‘Outfit’ is extremely upset by ‘Project RISE’ and has ordered it stopped.⁷

1. Whether Hogan Has Engaged in Prohibited Associations with Teamster Members

The Consent Decree prohibited IBT members from “knowingly associating with any person . . . enjoined from participating in union affairs.⁸ By memorandum dated May 31, 2003, General Counsel Patrick Szymanski and Human Resources Director Lynda Sist notified “All IBT Employees” that

[t]he Consent Decree prohibits any Teamster member or

officer from ‘knowingly associating’ with anyone who is

permanently barred from the Union pursuant to an IRB

decision. This prohibition applies to Mr. Hogan and Mr. Passo

and not only prohibits contact that concerns Union affairs, but

also prohibits purposeful social contact with Mr. Hogan and

Ann Passo even though that contact is completely unrelated to

Union affairs. Teamster members have themselves been

barred from the Union for having purposeful contact with

individuals who have been barred from the Union.⁹‘

On October 28, 2003, Hogan was observed meeting with Local 781 President and Principal Officer Joseph L. Bernstein. The two met alone at the Black Ram Steakhouse in Des Plaines, Illinois, on a Tuesday sometime between 12:05 p.m. and 2:50 p.m. The details of this observation are set forth in a report relating to Local 781 (see Appendix, Tab 4).¹⁰

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Hogan was also observed in the company of Teamsters at the Navy Pier on September 23, 2003. A Local 714 member employed at the Navy Pier stated that, at approximate^ly 10:30 to 11:00 a.m., while working in a traffic position on the ramp leading to the Navy Pier dock, another IBT member contacted him, stating “`guess who is coming.'” As a result, he inferred Hogan would be arriving and should be permitted to park in a reserved space in the dock area. The ramp provided the only access to the dock area and is closed to the public. ¹¹

Approximately 30 minutes later, Hogan arrived with Richard Simon who, as discussed above, has ties to organized crime and the Hogan family. Hogan drove up the ramp and parked in a reserved spot. Local 714 chief steward Dale Torii came out and greeted them and the three entered the facility, with Hogan stopping to shake hands with IBT members along the way. They walked toward the Riva Restaurant.¹²

This Local 714 member went to the Riva Restaurant and observed Hogan and Simon meeting with approximately 20 other individuals in a meeting room area. A waiter told another 714 member who witnessed the meeting that it was for the Chicago Convention and Tourism Bureau. Simon was chairman of the Bureau in 2003. After approximately one hour, the meeting broke up and Hogan and Simon moved to the restaurant area to eat lunch with approximately 10 of the other attendees of the meeting. Later in the afternoon, while working on the dock, the 714 member observed Torii and Hogan walking from the inner Navy Pier area to Hogan’s car. After engaging in brief conversation with Torii, Hogan departed. Other Local 714 members provided similar details from their own observations of Hogan at the Navy Pier on September 23, 2003.¹³

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A member of decorators local 17 who knew Hogan, saw him at the Riva Restaurant meeting at the Navy Pier on the same day. This non-Teamster stated that he was “`afraid” of Hogan because in approximately 1996-1997 Hogan was promoting a bill that would have been devastating to all labor locals involved in the trade show industry. The bill would have gotten rid of all the unions,’ placing all the employees into one labor pool that would have been run by Hogan. If this bill passed, Hogan would have had full control of this non-Teamster’s family’s well-being, which, from his observation of Hogan’s handling of Teamster issues, could have extremely negative consequences. ¹⁴

In early September 2003, a former IBT employee observed Hogan, Robert Hogan, and barred member Dane Passo together at the bar of a restaurant with a fourth person who was later identified as John Coli, the current Joint Council 25 president. The four were observed having drinks, then going to a table and having dinner.¹⁵

On September 17, 2002, Hogan was observed leaving a fund-raiser for Scott Fawell, convicted former head of Chicago’s Metropolitan Pier and Exposition Authority (McPier) and chief of staff for Governor George Ryan, in a car registered to Local 714. An unidentified male was driving.¹⁶

A retired IBT member stated that in March 2003, Hogan attended a St. Patrick’s Day event at Plumbers’ Hall that was attended by most of Joint Council 25 and Hogan talked to IBT members.¹⁷

In November 2002, a fund-raiser was held for Hogan to raise money to fight his IRB-imposed debarment. Despite being specifically advised by the IBT general counsel that attendance at this function would violate the Consent Decree, Local 714 attorney Marvin Sacks, Richard Simon, and Local 714 members and Rosemont Exposition Center Chief

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Steward Mike Hansen (stepbrother of Nick Boscarino, discussed above), movie captain Armand Paoletti, and James A. Hogan, attended this fund-raiser. Sacks was also observed with Hogan on two subsequent occasions ¹⁸

Investigation is necessary to determine whether Hogan’s association with any Teamster member, or as in the case of Marvin Sacks, Teamster representative, is of a prohibited nature and demonstrates continued influence over 714 members.

1.        Whether Hogan Continues To HaveInfluenceOver Teamsters in the Chicago Area and Whether He Has Contacts with Associates of Organized Crime

Because Hogan is perceived by many to have influence over Chicago-area Teamsters, his alleged connections to associates of organized crime remain a concern. As noted above, in October 2003, a former Local 786 official stated that IBT officials in Chicago are puppets for the Outfit and do as they are told, including Hogan and Coli.

In July and October 2003, a retired IBT member claimed that Hogan was the intermediary for the IBT and the Chicago Outfit. He stated that while they were at a restaurant, Hogan went to talk with the Caruso brothers, former LIUNA officials known to be organized crime members. After Hogan’s conversation with the Carusos, he told the now retired member, “‘[w]e didn’t see those guys today,” evidencing his awareness of their organized crime affiliation.¹⁹

In November 2003, a Local 714 member reported that there was a lot of talk in the trade show industry regarding Hogan and Richard Simon (whose organized crime ties are described above), There was a fear that Hogan and Simon were using their influence in

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the Chicago Convention and Tourism Bureau “to alter the structure of labor at trade show facilities:

In December 2003, the principal officer of a Chicago-area local stated that it is “hard to measure^“ whether Hogan is still running Joint Council 25, but he knows, without specifying how he knew, that a deal was struck with Joint Council 25 President Coll “to elevate Bobby Hogan to [recording secretary of] Joint Council 25.”²¹

At a golf outing in July 2002, Hogan was observed and photographed with Boscarino, a former Local 714 member and old friend of the Hogan family, as members of the same foursome. Boscarino has been identified as having ties to organized crime.²²

A former Chicago police officer and 714 member reported that approximately two years ago he saw Hogan and his brother James M. having breakfast with Rosemont Mayor Donald Stephens and John Serpico. Serpico has been identified as a member of the Chicago Outfit and was ousted from LIUNA because of his alleged organized crime ties. In July 2001, he was convicted of a kickback scheme that involved using his influence with the Central States Joint Board.²³

Las Vegas law enforcement authorities disclosed that on June 27, 2001, Rick Rizzolo, a Las Vegas strip club owner with ties to the Chicago Outfit, held a private party attended by Hogan. Rocco Lombardo, a Chicago Outfit member and the brother of Outfit leader Joseph A. Lombardo, was also in attendance.²⁴

In March 2003, one of Hogan’s relatives who is also a Local 714 member believed that Hogan is still “‘pulling all of the strings’ and running Local 714 through his son Robert and brother James m.²⁵

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D.:       Whether Hogan Is Involved with Teamsters in the Receipt of Kickbacks or Other Corrupt Deals

In November 2002, a retired IBT member familiar with Joint Council 25 stated that the Hogan and Coli families are close and that Hogan wanted Coli to be the Joint Council 25 president so that Hogan would keep getting his share of kickbacks. This retired member further stated that he was ordered by Hogan to assist a salesperson who was selling legal insurance to members. This salesperson told the retired member that “`Hogan’s getting 5%, you will have to get yours from him.’ The retired member stated that Hogan had his son Robert assigned responsibility for the Joint Council 25 political action committee to insure that Hogan would continue to receive kickbacks.²⁶

This retired member further stated that Remke Printing, a printing company that has provided printing services to Joint Council 25, is owned by members of the Hogan and Coli families. Hogan and his brother James M. were alleged to have a hidden interest in this business. The witness stated that, when the joint council began to request bids for printing work, Hogan ordered him to get the bids, which Hogan would review, and then told him to telephone the Coli family member who ran Remke to advise him of the low bid. According to the witness, James Coli, who was barred from Local 727, operated Remke. Remke’s owner was identified as either Coli’s sister or sister-in-law. This witness, however, believed that Remke no longer is performing printing work for the Joint Council, but that has not been confirmed.²⁷

This former member’s information was corroborated in part by public records. Records of the Illinois Secretary of State identified Karen L. Coli as the president of Remke Printing. Remke Printing also did business as JIKA, Inc. and James Coli was identified as

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the previous secretary for JIKA. The corporate status is listed as, “inactive-dissolved.”²⁸ Additionally, in November 2003, a Meeting Masters Championship Golf Tournament was held in Las Vegas, Nevada. Hogan was listed as a participant in the event, representing Remke Printing.²⁹

A high-level Chicago law enforcement officer advised that in February 2004 he received information that Hogan and his brother James M. were involved in an investment management company, National Investment Services (NIS), and each received in excess of $500,000.00 in consulting fees from NIS in return for getting business for NIS. This law enforcement source further stated that, since the agreement was made, NIS’s managed assets increased from $20 million to $4 billion ^.3″ A review of Form 5500s for Local 727’s health and welfare and pension plans listed NIS as an “investment manager” for the years 1998 through 2001 and 1998 through 2002, respectively. Over these time periods, the health and welfare plan paid NIS $59,013.00 and the pension plan paid $425,475.00. A review of other Form 5500s revealed that NIS was also a provider for pension funds affiliated with IBT Locals 703, 710, 744, and 738.³¹

Information obtained in February 2004 raised questions about the propriety of a 2002 sale of a tractor-trailer by Movies In Motion or another of the companies owned by William Hogan III to Joint Council 25, at a time when Hogan was the joint council president. Salvatore Galioto, former Local 714 member, also has an ownership interest in Movies In Motion. (Galioto’s mother Ann held the interest for a time, then transferred it back to Galioto.) Galioto acknowledged having been publicly reported to associate with the Chicago Outfit and has close ties with the Hogan family. Hogan family members were partners with Galioto in Movies In Motion, including Robert Hogan who was originally a

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partner in the business and sold his interest to his brothers, James A. Hogan and William Hogan Ill, who are believed to be current owners of Movies in Motion. Hogan family friend Dennis Collucci transferred his interest in the business to the children of James M. Hogan.³²

This source stated that Joint Council 25 overpaid Movies In Motion for a tractor-trailer in poor condition. He estimated that the Joint Council paid about $100,000.00 for the tractor-trailer and paid an additional $100,000.00 toward its repair.³³ Form LM-2 for 2000 filed by Joint Council 25 documented its purchase of a truck for $106,400.00 (the seller is not identified). That same year the Joint Council recorded a truck expense of $17,047.00 (the specific truck is not identified). In 2001, truck expenses were recorded as $42,389.00 with the explanation that:

The Joint council owns a semi trailer truck which displays the Teamsters logo. The truck is used primarily for advertising and Teamster promotion. The truck is not assigned to any individual. Expenses for maintenance and operation are not allocated to any individual and are reported on Schedule 15 as truck expenses.

In 2002, the LM-2 reflected truck expenses as $25,299.00 with the same explanation as given the previous year.³⁴

Investigation is necessary to determine whether the semi was sold to Joint Council 25 by a business owned by a Hogan family member or friend and whether the price paid for the truck was fair market value.

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1. WhetherHogan Is Involved in Facilitating Contracts that Replace Teamsters with Nonunion Labor

Consistent with the conduct revealed in the IRB’s May 29, 2003 decision barring Hogan from the union, there is reason to believe that Hogan is directly or indirectly involved in facilitating contracts that result in Chicago-area Teamsters being displaced by nonunion labor for the benefit of Hogan’s family, friends, and business associates. These arrangements are described in a report on the displacement of Teamsters by nonunion labor and substandard contracts (see Appendix, Tab 7).

To summarize briefly, investigation of the use of nonunion labor in the Chicago area has revealed connections between Hogan, his family and friends, temporary labor suppliers, and organized crime. These connections included the following:

• work performed at McCormick Place by United Maintenance, owned by Richard Simon, who has ties to organized crime, and Hogan’s brother Michael Hogan, an officer of United;

• work performed at McCormick Place for a trade show contractor by Minute Man, a temporary labor supplier owned by Sam Lucarelli Jr., who pleaded guilty to federal RICO charges in the 1980s and is believed to be associated with mob figures;

• work performed at Rosemont Exposition Center for trade show contractor RES, believed to be partially owned by Michael P. Hogan and Surestaff, a temporary labor supplier, owned and operated by Raymond Morelli, who confidential sources observed associating with Outfit figures;

• work performed at McCormick Place for trade show contractors by Empties, Inc., a company that moves empty crates, owned by Hogan’s nephew Ronald Maxwell Jr., and Labor World, Inc., a temporary labor company founded by Louis A. Morelli, an individual known to associate with the Chicago Outfit; and

• work performed at McCormick Place for trade show contractors by Bomark Cleaning Service, a company that moves empty crates, owned by former Teamster Chief Steward Boscarino, an individual with close ties to the Hogan

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family, who is reported to have ties to organized crime figures, and who was convicted in February 2004 of laundering thousands of dollars in connection with an insurance fraud scheme.³⁵

Ill.     SUMMARY

Considering the observations of witnesses placing Hogan with Teamsters (and a Teamster representative) since his disbarment; statements that Hogan continues to be involved in Teamster affairs; Hogan’s connections to the displacement of Teamsters by labor suppliers with organized crime ties; his ongoing relationships with Richard Simon and Nick Boscarino who are known to have ties to organized crime in Chicago; his brother Michael Hogan’s business partnership with Simon in a business that profits from the use of nonunion labor; his alleged involvement in the receipt of kickbacks; and keeping in mind Hogan’s past misconduct as revealed in the IRB’s May 29, 2002 decision barring him from the union, a personal representative is necessary to conduct a comprehensive investigation of the extent of Hogan’s continuing influence over the union.

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ISSUES RELATING TO LOCAL AND BENEFIT
FUND SERVICE PROVIDERS

Numerous intelligence sources have indicated that one of the Chicago Outfit’s principal reasons for maintaining connections with Teamster entities is to profit from schemes related to pension and health and welfare funds. According to sources, Outfit-associated individuals and entities also seek to profit from expenditures by the locals and the joint council. Service providers to Teamster locals and affiliated benefit funds are often the vehicles by which organized crime-influenced schemes are executed.

This recent intelligence gathered in the Chicago area is consistent with historic patterns of organized crime exploitation of the union. As described in the IBT Organized Crime Report released in October 2002, gaining access to the billions of dollars in Teamster-affiliated funds was one of the most important reasons organized crime figures were motivated to infiltrate the Teamsters Union^.1 Despite great progress in keeping the funds safe from organized crime influences and corruption since the apex of mob infiltration in the 1970s, the 2002 report noted recent concerns about certain service providers and warned that “Teamster-affiliated funds now constitute the most likely targets for racketeers seeking to emulate the successes of their predecessors.” ²

The vast amounts of money collected in Teamster-affiliated benefit funds, which provided organized crime a major incentive to infiltrate the union years past, have increased and now approach $85 billion. While most of these funds are being managed responsibly and have appropriate safeguards to make organized crime penetration improbable, their sheer aggregate volume makes them a potential target for modern racketeers. The Project RISE field study discovered enough instances of attempts to mismanage funds for personal gain and other forms of misconduct to make the potential threat to the funds more than a remote possibility.³

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In Chicago, the evidence gathered to date indicates that exploitation and mismanagement of funds is occurring with sufficient regularity to warrant serious concern. As noted in the main report, the Chicago area, more than anywhere else where Teamster entities are concentrated, continues to furnish the conditions that historically have made the union vulnerable to organized crime infiltration and systemic corruption: an organized crime family that still has considerable strength, a corrupt business and political environment, and resistance to anti-racketeering reform efforts by key Teamster leaders.

The matters described below are by no means exhaustive of the fund/service provider issues that have emerged in the Chicago area, many of which have been discussed elsewhere in connection with individual locals. They are, however, illustrative and warrant overt steps to ensure that union leaders and fund trustees are carrying out their fiduciary responsibilities in the context of Outfit attempts to infiltrate and exploit Teamster entities in the area.

1. LONGSTANDING SERVICE PROVIDERS

Some of the service providers in the Chicago area have longstanding relationships with the joint council and locals that date to the 1950s through 1970s era, when organized crime penetration of the Teamsters Union became a public scandal in which the Chicago Outfit’s control over the Central States Pension Fund and other Teamster entities played a prominent role. By themselves, the longstanding ties between certain Teamster entities and their service providers are not improper. When such historically close ties are coupled with recent evidence of organized crime connections, criminal misconduct, or less than arm’s-length dealing, however, there is reason to make inquiries to ensure that historic

patterns are not reestablishing themselves. This is especially true when, as with the three examples, discussed below, the service providers played key roles in administering or auditing Teamster entities that are known targets for organized crime exploitation.

A..    Group Administrators

1. Background

According to public documents, Group Administrators, Ltd. is run by David Dorfman, Allen M. Dorfman’s son, and William Webbe. Both David Dorfman and Webbe were employees in Allen Dorfman’s companies and Webbe’s office was used for private meetings between Allen Dorfman, Don Peters, and organized crime member Joseph Lombardo. At the time, Joseph Lombardo was a capo in the Chicago Outfit and served as its contact to the Teamsters. He was also a named defendant in the 1988 civil RICO case brought against the IBT. Currently, he is out of jail and based on information from law enforcement sources is the boss of the Chicago Outfit and once again active.

During the “PENDORF” investigation, court-authorized wiretaps and bugs were placed on the phones and in the offices of Allen Dorfman’s insurance company and conversations involving David Dorfman, Webbe, and Lombardo were recorded. In four separate conversations, Webbe and Lombardo were the only participants. Webbe was in an additional nine conversations with Lombardo and others. David Dorfman was taped in four separate conversations with Lombardo and others, some without David’s father. One notable conversation included Webbe, David Dorfman, Lombardo, and Anthony Spilotro, who before his murder, was a capo in the Chicago Outfit and served as liaison to the Chicago Outfit’s interests in Las Vegas.

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In 1981 Allen Dorfman, Lombardo, former IBT General President Roy Williams, and others were indicted and later convicted in the PENDORF case for their attempt to bribe U.S. Senator Howard Canon with assets from the Central States Pension Fund. Webbe was named in the indictment as an unindicted co-conspirator. Moreover, in the government^‘s response to a defense motion for a bill of particulars, the government identified David Dorfman and others as “co-conspirators and co-schemers with the defendants and William E. Webbe.”⁴

Local 714’s continued use of Group Administrators, Ltd. (GA) was an issue that surfaced during the Project RISE field study of that local. Then Vice President James M. Hogan stated in his Project RISE interview that David Dorfman and GA have been involved with the fund as a third party administrator for “as long as I can remember.” He stated that Allen Dorfman was the fund’s previous administrator, and David Dorfman was “grandfathered-in” after his father was indicted for fiduciary violations involving the Central States Pension Fund. Similarly, William Hogan, Jr., former Principal Officer of Local 714, stated in his Project RISE interview that David Dorfman was a “carryover” from the fund’s business relationship with his father and the insurance company he owned, Amalgamated Insurance Co., but claimed not to know Webbe, Hogan, Jr. did not express any concern about doing business with Dorfman or his company. Employee Trustee Joseph Martucci was unable to provide any specifics regarding the administrative services or fees associated with Dorfman’s company and did not know the average cost to process a claim⁵

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During the field study, it was pointed out to the Hogan leadership, Martucci, and Marvin Sacks, the local’s counsel, that the same service provider, GA, was found to have charged excessive fees at Local 743’s health and welfare fund. (For a discussion of issues related to Local 743, see Appendix, Tab 3.) Local 714 officials and Sacks claimed to be unaware of the matter. During the Local 714 field study, requests were made to Martucci and the fund’s counsel for documentation, such as Dorfman’s contract with the funds, to determine if some of the same arrangements that existed at Local 743 also existed at Local 714. These requests, however, were not honored.

The Local 743 health and welfare fund had used Group Administrators, Ltd. as its third party administrator until it was discovered in 1995, during an IBT trusteeship of the local, that Dorfman’s company was charging excessive fees — three times the industry standard for a fund of a similar size. In 1995 the IBT trustee brought a class action suit against the employer and past union trustees. In May 2000 the lawsuit was settled when the trustees agreed to reimburse the fund. As in the case of Local 714, David Dorfman had replaced his father at the Local 743 health and welfare fund following his father’s conviction in the PENDORF case.⁶

Follow-up interviews were conducted several months later at Local 714 to determine what, if any, action was taken in response to the information the local had been provided concerning Dorfman’s excessive billing at Local 743. As of that time, no audit or other action had been taken by the fund fiduciaries or the local’s leadership in response to this information. Even more troubling, fund fiduciaries responded with misinformation and

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refused to cooperate further during the Project RISE field study^.7 In the case of Local 714, the GA issue, along with others, has been turned over to the IRB for investigation. ⁸.

2           Current Issues

As discussed elsewhere (Appendix, Tab 3), in addition to Local 714, Local 743 has apparently started once again to use Group Administrators, and Local 781 has continued its longstanding relationship with the firm. (For a discussion of issues related to Local 781, see Appendix, Tab 4.) In both cases, as in the case of Local 714, there are other current issues affecting the locals that underscore the need to inquire into their relationship with GA.

1. Leahy& Associates
2. Background

The relationship between Leahy & Associates and Chicago area IBT locals is almost as longstanding as the Chicago locals’ and associated funds’ relationship with the Dorfman family. Both Paul (Red) Dorfman and his son, Allen, were closely associated with Jack Leahy, the father of the firm’s current principal figure, John J. Leahy. At about the same time that Allen Dorfman was being set up to process claims for the Central States Health and Welfare fund in the 1950s, the Leahy firm, through its close association with the Dorfmans, was establishing a parallel relationship to provide services for health and welfare funds not affiliated with the Central States Fund. The relationship between the Leahy firm and Joint Council 25 and its constituent locals became so close that for many years the Leahy firm occupied offices on the same floor as Joint Council 25 in Chicago’s Teamster City, located at 300 South Ashland Avenue.⁹

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In 1998 a group of extras who worked in Local 714’s Movie/Trade Show Division filed a lawsuit against, among others, trustees of a Local 714 benefit fund, alleging that employer contributions were being made into the fund on their behalf, but that they were never told they were eligible for benefits. The lawsuit, which was eventually settled with a payment to the plaintiffs of more than one million dollars, alleged that Leahy & Associates had played a role in keeping the plaintiffs in the dark about their benefits.”¹⁰ The settlement agreement ending the lawsuit included a “Settlement Funding Agreement,” which recited that the insurance carrier for the fund “believes that some or all of the claims against Local 714… arose as a proximate result of the acts, errors or omissions of Leahy & Associates” and required Leahy & Associates to pay a substantial portion of the settlement.¹¹ Recent public filings by the Local 714 Health and Welfare Fund indicate that it continues to employ Leahy & Associates.¹²

As of 2002, according to public filings by funds associated with Chicago area Teamster locals, Leahy & Associates was serving as a broker/agent for at least 10 Teamster affiliated benefit funds in the Chicago area.¹³

Confidential sources familiar with Chicago-area Teamster affairs, including the relationships between Teamster-affiliated funds and their service providers, have indicated that Leahy & Associates was known for bestowing gifts and lavish entertainment on Teamster clients, and that a number of high ranking Teamster officials in the Chicago area have compromised themselves in their relations with the Leahy firm.

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2. Current Issues

On September 25, 2003, an indictment was filed in the U.S. District Court for the Northern District of Illinois naming John J. Leahy, the president of Leahy & Associates, Inc., as a defendant along with six others, including another Leahy officer and members of the Duff family. The Duffs were considered by law enforcement authorities in the Chicago area to be linked to organized crime and have been publicly reported as such.¹⁴

The indictment’s first count charged the Duffs under the Racketeer Influenced and Corrupt Organizations Act (RICO), accusing them of operating a racketeering enterprise referred to in the indictment as the Duff Family Business Enterprise,” which consisted of a number of “inter-related entities [that] were owned, operated and controlled, in whole or in part, directly or indirectly by male members of the Duff family.”¹⁵ One of the Duff family business entities was Windy City Labor Service, Inc., which, according to the indictment, “was in the business of supplying unskilled temporary day laborers on an as needed basis principally to wholesale liquor warehouses and refuse transfer and sorting facilities.^“16 Leahy and Edward Wisniewski, the other Leahy & Associates officer, were charged in counts 16 through 23 of the indictment with mail and wire fraud in furtherance of a scheme to defraud a State of Illinois agency and various insurance entities of more than “$3 million in unpaid workers’ compensation insurance premiums.” The scheme involved, among other things, falsely classifying Windy City Labor’s employees — who were in reality ^“temporary day laborers engaged solely ⁱⁿ unskilled, manual labor as warehouse workers and driver’s helpers” — as “‘Clerical” or “`Labor Union” employees, which carried a lower job risk classification and consequently an insurance premium rate more than 20 times

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lower than their actual jobs would have. The scheme also involved frustrating the efforts of insurance carriers to determine the true nature and full scope of the business activities Windy City Labor and thereby discovering the fraud. This was accomplished in part by refusing to provide auditors with complete access to financial and payroll records, accurate client lists, and other pertinent information.¹⁷

Leahy and Wisniewski, who was the vice-president of commercial insurance sales of Leahy & Associates and who served as a “representative and agent of Windy City Labor,” were charged with participating in the scheme along with James M. Duff, whose companies benefitted from it. As part of the scheme, Leahy and Wisniewski, along with Duff, were charged with submitting false applications for insurance coverage to private insurance companies, including ULICO Casualty Corporation, a subsidiary of a union‑owned company. Most of the specific acts in furtherance of the fraudulent scheme charged against Leahy and Wisniewski occurred between 1989 and 2001.¹⁸

3. Summary

The recent indictment of John J. Leahy and another officer of Leahy & Associates did not involve charges stemming from the Leahy firm’s work for Teamster entities. However, the nature of the misconduct alleged in the indictment — taking part in a racketeering scheme to benefit a group that has been publicly linked to organized crime is precisely the kind of misconduct the IBT’s anti-racketeering reform program is designed to guard against. Indeed, one of the charges made in the indictment was that the Leahy officers helped defraud a union-owned insurance company. As noted above, a group of Local 714 members alleged in a civil suit that Leahy & Associates had been

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complicit in wrongfully denying members’ benefits, and there is intelligence information to the effect that Teamster leaders in the Chicago area have entered into compromising relationships with the firm or its principals. This, coupled with the number of Teamster-related benefit funds Leahy & Associates has provided services to, and the number of unresolved issues surrounding such funds, indicates the need for a review of the Leahy firm’s relationship with Chicago-area Teamster entities to ensure that they are arm’s-length and consistent with the union’s fiduciary responsibilities.

1. Thomas Havey, LLP/Legacy Professionals, Inc.

Thomas Havey, LLP was the dominant accounting firm for labor unions.¹⁹ It has served numerous Teamster entities in various parts of the country, and as of 2002 was serving as the accountant for at least one dozen Teamster-affiliated benefit funds in Joint Council 25.²⁰

In 2002 two members of the firm, one partner and one accountant, “pleaded guilty to federal criminal charges of `aiding a conspiracy’ to defraud the United States by helping union officials hide on government disclosure forms how they spent more than $1.5 million in union dues.”²¹ The accounting firm helped the vice-president of the ironworkers union hide his daughter’s embezzlement of over $100,000.00 from an ironworkers benefit fund. Havey’s accountant and partner hid the expenditures and failed to disclose the thefts to the fund trustees.²²

In their 2002 Form 5500 filings, Chicago-area Teamster entities that had used the Havey firm reported that it had been terminated because it was no longer engaged in public accounting.²³ The same locals reported as their new accounting firm Legacy

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Professionals, Inc., a newly created firm that appears to consist of former Havey accountants from the firm’s Midwest office.²⁴

The Havey firm has served a wide variety of clients in various parts of the country and there is no evidence to suggest that the recently exposed misconduct of certain Havey managers, which did not involve Teamster clients, was characteristic of the firm’s services generally or with respect to any particular Teamster entity that it served. The number of unresolved issues relating to Teamster entities in the Chicago area, however, and the numerous labor organization clients for which the Havey Firm (and apparently its successor) perform services point to the need for a review of the process used by Chicago Teamster entities to select auditors and accountants and why they have not surfaced some of the issues described in this report and its appendices.

II          OTHER SERVICE PROVIDER ISSUES

1. Vendors with Possible Connections to Barred Member William Hogan Jr.

Among the many allegations and issues surrounding the Teamster career of William Hogan Jr., former Joint Council 25 president and principal officer of Local 714, was that he, his family members, and close associates had interests in, or were employed by, businesses that provided goods and services to Teamster entities as well as to employers organized by Teamster locals. The scheme for which the IRB barred Hogan from the union, for example, involved attempts to favor the firm of a Hogan crony that also employed a Hogan relative. (For a discussion of Hogan’s continuing influence, see Appendix, Tab 8.)

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Some of the firms allegedly connected to Hogan are, or in the recent past have been, service providers to Teamster entities. These include Remke Printing, which according to a confidential source, obtained Joint Council 25 business through bid-rigging when Hogan was president, and National Investment Services (NIS), which has been an investment advisor to a number of Teamster benefit funds (For a discussion of NIS, see Appendix, Tab 2, which addresses issues relating to Local 727).

Because of Hogan’s barred status, ties to organized crime figures, and apparent continued influence over Chicago Teamsters, information about his ties to Teamster vendors should be pursued, including through overt investigation when appropriate.

1. Spano/Life Insurance Marketing

The 2002 IBT Organized Crime Report identified a benefit-related issue involving marketing efforts by a life insurance company. On June 6, 2000, the IRB advised the IBT that it had discovered an improper marketing scheme by American Income Life Insurance (AILI) that offered each local executive board member, and sometimes other local employees, $10,000.00 in free term life insurance in return for the officers’ implicit agreement to use the local’s letterhead to promote AILI to the members without disclosing the free coverage to the officers. In response to the information provided by the IRB, the IBT advised local officers of the problem and notified AILI executives.²⁵

Investigations and intelligence-gathering activities in the Chicago area have to date produced no evidence of any repetition of the conduct that prompted the IRB’s notification in 2000, which was predicated upon undisclosed benefits offered to officers that were not offered on equal terms to members. In the Chicago area, however, another concern has

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arisen in connection with AILI insurance marketing efforts: the role played by members of the Spano family in marketing AILI insurance products.

Rona Spano, an AILI representative, has marketed insurance products to Chicago-area locals and has associated with various Teamsters in that area.²⁶ Because of restrictions placed upon overt investigations in Chicago, we have been unable to ascertain the exact scope and nature of the services marketed to Teamster entities by Rona Spano or the nature of her other associations with Chicago Teamsters. Inquires into this subject should be made, however, because of Rona Spano’s relationship to persons with organized crime backgrounds, and because of indications that she and her husband may be under investigation by federal authorities.

Rona Spano’s husband, Mark Spano, is the current president of the Central States Joint Board, an umbrella organization for certain small AFL-CIO non-Teamster locals in Chicago.²⁷ Mark Spano’s predecessor as president of this organization was John Serpico, an associate of the Chicago Outfit who was in prison as of February 2003.²⁸ Mark Spano’s father, Paul Spano, is a prominent member of the Chicago Outfit who, according to a published Chicago Crime Commission Chart, specialized in labor unions.²⁹ In February 1990, Paul Spano was indicted with 20 others for conspiracy to conduct an illegal gambling business. Spano eventually pleaded guilty to the charges.³⁰ Paul Spano’s brother, Michael A. Spano, Sr., and his son were convicted in August 2002 in a racketeering , indictment along with the Cicero town president in connection with an insurance fraud scheme.³¹

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A law enforcement investigator has recently made inquiries concerning the activities of Mark and Rona Spano in connection with an apparent federal investigation. Additionally, IBT investigators have obtained information and documentation concerning an allegation about an insurance marketing scheme promoted by Mark Spano to Central States Joint Board union members, in which he advised them to contact his wife for further details. The allegation, which was apparently made by a member of one of the Central States Joint Board unions, is that Mark Spano’s promotion of his wife’s insurance products is part of a scheme designed to enrich organized crime-related businesses.²⁹

Because of the extensive organized crime connections of members of the Spano family, their involvement of labor racketeering schemes, and current allegations centering around insurance schemes promoted by the Spanos, overt inquiries should be made concerning relationships between Teamster entities or individuals and any of the Spanos to determine whether the Spanos are involved in the Chicago Outfit’s infiltration of the Teamsters Union.

III      SUMMARY

Issues relating to service providers usually arise in connection with specific locals and their benefit funds. Because racketeers have historically used service providers to carry out their schemes — and are continuing to do so according to intelligence sources – careful attention should also be paid to service provider relationships that involve ,multiple Teamster entities such as those described above.

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ISSUES RELATING TO INTERNATIONAL ORGANIZER NICK M. PETRECCA

Nicholas M. Petrecca, also known as Nick M. Petrecca, is a 38-year member of Teamster Local 705. He currently serves as an IBT international organizer.¹ This report addresses the following issue:

• Whether Nick M. Petrecca, IBT international organizer, is an organized crime associate.

1. BACKGROUND

Except for a two-to-three month suspension in the mid 1990s, Petrecca’s membership in the Teamsters has been continuous since approximately 1965. Petrecca was hired as an international organizer on August 1, 1999.² In his 2001 sworn statement before the IRB, Petrecca stated barred Teamster Dane Passo spoke to the former head of organizing, International Vice President John Murphy, on Petrecca’s behalf about getting him the international organizer position. Petrecca first met Passo when Passo was a steward and Petrecca his representative at Carolina Motor Freight. Petrecca currently reports to John Farmer, director of organizing.³

Before becoming an international organizer, Petrecca was a business representative appointed by former Local 705 Principal Officer and Secretary-Treasurer Daniel Ligurotis, who was permanently barred by the IRB for embezzlement and hiring convicted felons. Local 705 was placed in trusteeship in 1993. Petrecca was terminated on December 31, 1993, by the then IBT trustee of the local.’ Petrecca returned to driving a truck, this time for Marina Trucking, but after one-to-two years could not work because of an injury. Petrecca retired in August 1998. The injury was from an altercation with former Local 705 Principal Officer Gerald Zero, who, as a result of the altercation, was eventually charged

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by the IRB and suspended from office for one year after the IRB rejected the IBT’s three-suspension.⁵

II          WHETHER NICK M. PETRECCA IS AN ORGANIZED CRIME ASSOCIATE

A      Law Enforcement Organized Crime Listings

In one published law enforcement report and in numerous unpublished reports, petrecca is identified as an organized crime associate. Confidential informants provided corroboratioⁿ that Petrecca is a low level associate of the Outfit. Additional investigative efforts are needed to determine whether Petrecca’s organized crime status continues today,

In 1994, the Illinois Police and Sheriffs News, a publication designed to “‘educate the public on the activities of organized crime and organized crime figures,'” listed Petrecca as an associate of the 26th Street Group which at that time was headed by organized crime member James La Pietra.⁶ At approximately the same time, the Chicago Crime Commission developed an internal Outfit chart that was never published that also identified Petrecca as an associate of the 26th Street Group. A second unpublished Chicago Crime Commission chart developed in the mid-to-late 1990s likewise identified Petrecca.⁷ Independent of the Chicago Crime Commission, local law enforcement maintained charts of alleged organized crime figures. As late as January 1999, four separate charts identified Nick Petrecca as an associate of the 26th Street Crew, and two of these charts indicated that Petrecca was involved in gambling operations.’

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B         1984 Racketeering Indictment

In 1984,  Petrecca along with several known members or associates of the Chicago Outfit, including John L. Manzella, Robert Salerno, and David O’Malley, were indicted by federal government for their involvement in a RICO enterprise aimed at extorting “street tax’ payments from legal and illegal businesses in Illinois and Indiana. Petrecca was indicted for being a participant in the enterprise and specifically for an act of extortion — obtaining money  the through the use of actual and threatened force and violence — that furthered the pattern of racketeering activity.⁹ According to the Chicago Sun-Times, vestigators labeled the defendants “middle-echelon underworld figures.”¹⁰ In a proffer of evidence by the federal government, a witness testified that “Little Nicky” picked up the “Street tax” a couple of times.¹¹ Petrecca, however, was found not guilty while Manzella, O’Malley, and Salerno were all found guilty.¹²

1. C.           Law Enforcement Sources

A retired Chicago policeman with 32 years of service — the last 17 of which he spent assigned to the FBI-Chicago Police Department (CPD) Organized Crime Task Force in a sworn affidavit stated that he had received information from three confidential sources in the 1980s that Petrecca was an associate of organized crime in Chicago. These sources were corroborated by physical surveillance and various intelligence reports. Each of the sources independently stated that during the 1980s Petrecca was an “enforcer” – used by the Outfit to intimidate and inflict bodily harm on individuals who did not cooperate with their demands — “affiliated with the 26th Street/Chinatown faction of the

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Chicago Outfit,” This law enforcement officer stated that one source added that Petrecca was involved in collecting “street taxes” with organized crime figure Robert Salerno.^{13 .}In the late 1980s, law enforcement sources reported that Petrecca worked for a longtime collector of “street tax” for the Chicago Outfit named John Manzella. Manzella reported to Outfit associates Gerald Scarpelli and William Petrocelli. Petrecca was also described as a collector of street taxes who subsequently stopped collecting.¹⁴ One source a longtime member of the Outfit — stated that in the late 1970s through the early 1980s he was “closely affiliated” with Petrecca and numerous other Outfit members.¹⁵ Another source, described as being responsible for running street operations for the Ferriola Crew —including collecting street tax, juice payments, gambling payments and more—advised that he used Petrecca, who he described as one of “his `own people,’ as a collector.¹⁶ Scarpelli called for a meeting with this source, Petrecca, and others at which Scarpelli announced he was taking control on behalf of Ferriola. Scarpelli demoted Petrecca and the source so they would no longer be collecting.¹⁷

When deposed by the IRB in February 2001, Petrecca acknowledged that Manzella was convicted and went to prison in connection with the racketeering case in which Petrecca was indicted.¹⁸ He also explained his most recent encounters with Manzella. Petrecca testified that “we live not far from one another. So occasionally I see him, and he is coming or I’m going, or we have a cup of coffee at this one restaurant.” Petrecca had been frequenting this restaurant, previously called the “Skyview” and now called the “Midway,” located at 63rd and Cicero, for 20 years. Petrecca thought he last “ran into” Manzella at the restaurant approximately four months prior to his testimony. Petrecca

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stated that he was walking into the restaurant and Manzella was walking out and they exchanged greetings^. Their conversation lasted one-to-two minutes.¹⁹

Petrecca testified that he stopped frequenting the restaurant about four or five months before his IRB testimony because he did not “want to jeopardize [his] job for any reason.” He knew that he should not go there; the restaurant was named in the racketeering indictment in which he had been charged. He further stated, however, that nothing triggered this change. Rather, his schedule changed so he “didn’t really have the time” to go there.” All tolled, he thought he saw Manzella between 5 and 10 times in ^,2000.^2′ Petrecca indicated he started going to the restaurant when he was driving a truck, but went there less frequently after he stopped driving.²² In the late 1970s and early 1980s, he went to the restaurant a lot more often and saw Manzella there.²³ During 2000, ;Petrecca thought he was at the restaurant about five times, saw Manzella there two or three times, and had coffee with him “a couple of times.” The same ratio existed from 1999.²⁴  Petrecca characterized their conversations at the restaurant as “normal, everyday” exchanges like: “‘How’s your wife?’ The house. You know, stuff like that.”²⁵ He did not tell Manzella that he worked for the IBT.²⁶

In addition to the restaurant, Petrecca described seeing Manzella in Manzella’s garage which is located near a gas station Petrecca uses. An alley runs from the gas station to Manzella’s garage; the garage is visible from the station. Petrecca thought he saw Manzella and went down the alley to speak with him approximately three-to-five months before his IRB testimony.²⁷ Petrecca acknowledged being inside Manzella’s home “a handful … maybe five” times, but denied being there in the year preceding his IRB

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testimony. Petrecca’s last visit, at least a few years earlier, was for the purpose of helping Manzella carry something into his home from the garage; on prior occasions the purpose was, to see woodworking projects Manzella had undertaken. Fifteen-to-twenty years earlier, Manzella had done some woodworking on a project in Petrecca’s basement.²⁸ Petrecca visited Manzella in the hospital when he had heart surgery in approximately 1993,²⁹ Petrecca attended Manzella’s son’s wedding in approximately 1981 and thought his wife had invited Manzella to their daughter’s wedding, which was sometime in the early to mid 1980s.³⁰  During this same time frame, Petrecca and Manzella attended boxing matches together.³¹

An FBI cooperating witness who played a central role in “Operation Silver Shovel,” a federal investigation that targeted politicians and labor officials in bribe schemes, also stated he knew Petrecca. In a 2002 interview, the informant characterized Petrecca as a “low-level Chicago `Outfit’ member.”³² A present Teamster confidentially stated that in the mid-to-late 1990s he saw Petrecca hugging Kenneth Bratko, an alleged high-level Outfit associate, in a restaurant.³³

A former law enforcement source was told by a business agent that Petrecca and Dane Passo were “involved with a South Side organized crime guy named Paul Spano [and]. . . supposedly Passo and Petrecca answered to Spano.”³⁴ In his February 2001 IRB statement, Petrecca acknowledged knowing Paul Spano, claiming the Spano family had a grocery in his old neighborhood.³⁵ He stated that he wasn’t sure if he ever “met” Spano, but knew him from seeing him in the store. To the best of his knowledge, Petrecca never met or spoke to Spano.³⁶

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III.        CONCLUSION

Information gathered to date suggests that Petrecca may be an organized crime investigative efforts were underway to collect additional, more recent evidence support this conclusion and several recent leads have not yet been investigated. These efforts were halted on February 24, 2004, by the shutdown directive issued on that date. `Giventhe,strength of the existing evidence, we recommend that a personal representative be appointed to continue the investigation of Petrecca’s affiliation and association with the Chicago Outfit

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ISSUES RELATING TO TEAMSTER MEMBER SYLVIA COZZO

Local 743 member Sylvia Tonina Cozzo, daughter of organized crime member and barred Teamster James V. Cozzo, works at the Central States health and welfare fund. During the time of the investigation into Local 786, an issue surfaced that Sylvia Cozzo was having contacts with Chris Spina, an alleged organized crime associate and former City of Chicago employee. This report addresses only the issues that arise from contacts between Cozzo and Spina, while other issues involving Local 743 are discussed in Appendix, Tab 3. Specifically, this report focuses on:

• Whether there is sufficient evidence to conclude that Chris Spina is an associate of the Chicago Outfit; and
• Whether Local 743 member Sylvia Cozzo was engaged in prohibited associations with alleged organized crime associate Chris Spina.

1. BACKGROUND
2. Sylvia Cozzo

Sylvia Cozzo has been a Local 743 member for 25 years and is the daughter of James Cozzo, who was barred from the Teamsters in 1990 for being a member of the Chicago Outfit and for associating with other organized crime members as described in Appendix, Tab 5.¹ She has been a claims processor for the Central States health and welfare fund for 24 years, a position in which she is responsible for entering data relating to medical bills into the Central States’ automated payment system. Cozzo has limited authority with respect to whether a claim is paid or denied because she enters a service code along with the codes that reflect the diagnosis, lab work, and treatment. For example, if the diagnosis is a “‘[s]prained ankle,”‘ and the lab work is listed as “[p]ap

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smear,^“ then she will enter a denial of payment service code because the treatment is unrelated to the service. She testified that she cannot affect the payment made to the provider once a claim is approved.^‘ Al Nelson, Central States Benefits Services Director and Sylvia Cozzo’s boss, confirmed that she had very little to no discretion in her job and must pay claims as they are brought to her. The payment is determined by the data entered into the computer about the claim.³

Cozzo was first hired by Amalgamated Insurance Agency which was headed by Allen M. Dorfman, who had close ties to the Chicago Outfit and was murdered in 1983.⁴ For a discussion of Allen Dorfman’s organized crime ties, see Appendix, Tab 3. Cozzo testified that she has had no contact with Allen Dorfman’s son David or her other two bosses when Amalgamated ran the business, Jimmy Dorfman and Bill Webbe, since Central States took over Amalgamated’s function.⁵‘

B.: Chris Spina

Until May 19, 2003, Chris Spina worked in various City of Chicago departments. At one time, he was a member of Local 726 working for the Department of Streets and Sanitation. In July 2002, Spina was made a Department of Transportation supervisor. Spina was identified as a close associate of two ex-felons, Dominic Longo and John Boyle, of the Coalition for Better Government, a political action committee, discussed in Appendix, Tab 1.⁶ Spina’s organized crime ties are discussed below.

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C,        James Cozzo

James Cozzo’s organized crime ties were well documented by the IRB in 1990. His Sylvia, however, claimed that her father was forced to leave the Teamsters for only associating with members of organized crime, with “friends or people that he knew.” She denied knowing he was removed for being an organized crime member, which she asserted was not true, and was unaware of the Teamster’s entry into the 1989 Consent Decree relating to organized crime matters.⁷

1. Jeff Hoff

Sylvia Cozzo knows Jeff Hoff, who she characterized as “[v]ery good friends” with her sister, Rosanne, and herself.⁸ Jeff Hoff’s prohibited association with Cozzo’s father, James Cozzo, is also described in the appendix, Tab 5, and detailed in the June 2003 interim report (see Appendix, Tab 5, Exhibit A).

II          CHRIS SPINA’S ALLEGED ORGANIZED CRIME TIES

1. What Constitutes an Organized Crime “Associate”

In determining whether an individual is an organized crime associate, the IRB has relied upon the standard articulated by FBI Supervisory Special Agent Brian F. Taylor in his sworn statement before the IRB. Special Agent Taylor explained the standard as follows: ^“[Made’ members” rely on “other individuals who, though not formally inducted into the La Cosa Nostra family, assist La Cosa Nostra members in a variety of ways concerning criminal activities.” This individual is an “associate.”⁹ According to Agent Taylor_:

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[an] individual can become an associate of a ^“made” member of La Cosa Nostra in various ways. For example, an individual can become an associate through his involvement in money-making criminal activities that come to the attention of a “made^“ member. An individual can also become an associate by doing a favor for a “made” member, or by havinq a favor done for him by a “made” member thereby establishing a relationship with the “made” member. Some associates have risen to positions of great influence with organized crime families because of their importance in family money-making activities. Some associates have become associated with more than one organized crime family. Only the most trusted associates are permitted to be present when “made” members of organized crime families meet¹⁰

In examining organized crime in Chicago, the Chicago Crime Commission characterized an ‘associate^“ somewhat broader, noting that an associate is “any individual who does business, share profits, facilitates organized crime activities, or is made privy to intimate information regarding the activities of organized crime in Chicago.”¹¹

1. Evidence of Spina’s Association with Organized Crime Figures

Chris Spina has been identified by various sources as having ties to organized crime. Law enforcement records dating to 1992 identify Spina’s “criminal activity” as “driving for Joseph Lombardo,” who law enforcement considered to be the head of the Outfit at that time. On Sunday, April 18, 1993, law enforcement agents observed Spina driving Lombardo, who was the subject of a surveillance designed to “identify & update associates.” Spina was stopped by Chicago police officers and identified himself as working at the time for the City of Chicago Department of Streets and Sanitation. Other law ^enforcement sources confirm that Spina is an associate of Lombardo and has been privately identified as part of the Outfit’s Grand Ave./North Side Crew.¹²

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Later, in 1993, Spina was accused of driving Lombardo while he was on “city time” and receiving overtime for it.¹³ Spina was fired from his Streets and Sanitation job for  drivong Lombardo, but he successfully appealed his termination. One article noted that like other men with alleged links to organized-crime figures, knows how to work the  system.” Spina claimed he was ‘taking a break during his work day” to drive Lombardo.¹⁴ A 1999 newspaper article reported that Spina is considered a “spy of the Clown,” referring to^– Lombardo. Quoting an unnamed source, the article reported that Spina was “`always running around, sniffin’ so he could run back to the old man’ and he frequently referred to Lombardo in conversation, calling him “`the guy” or “the Clown,” trying to show that he was a ‘real insider.^“15 On November 1, 2002, a political website identified Spina as “a ‘rising star’ of the Chicago Outfit’s Grand Avenue Street crew, a close confidante of ‘organized crime kingpins Joseph “The Clown” Lombardo and Joseph Andriacchi.”¹⁶ As recently as February 18, 2004, Spina was identified as an Outfit associate on local Chicago television. In an expose broadcast on Chicago’s CBS news, Spina was referred to as “the mob-connected ex-boss” of a city worker who had falsified his time sheets.¹⁷

Observations by IBT field representatives in 2003 revealed that Spina met with two organized crime members: Joseph (the Builder) Andriacchi and Albie Vena, who was identified as an associate of the North Side Crew in the Chicago Crime Commission’s 1997 chart. Andriacchi was identified on the same chart as the area boss of the North Side Crew. Today, he is considered by some to be the boss of the Chicago Outfit. A third individual — Phil Cozzo — who is the son of organized crime lieutenant James Cozzo and under indictment for racketeering and conspiracy was also present.¹⁸

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In July 2003, Spina was observed with Northside associate Albie Vena at the Café Cappucino located at 1123 West Grand Avenue. Vena and Spina stood outside the restaurant until two unidentified males arrived. Vena walked around the side of the building with one of the unidentified males and engaged in conversation, after which they returned_, to the front of the building and all four went inside the restaurant and occupied a rear table with other unidentified males. The Café Cappucino is across the street from the Grand and May Social Club, a known organized crime “operating location.” On six occasions, Spina was observed outside this social club, where numerous known organized crime members and associates frequent, including Andriacchi, Lombardo, Bratko, and Vena. ^19.

In September 2003, Spina met Vena outside the Grand and May Social Club and the two departed on a motorcycle with Vena driving. Spina and Vena traveled to the ‘Rosebud Cafe, 1500 West Taylor Street, where they joined Joseph Andriacchi at an outdoor table and talked for approximately one hour.²⁰ According to a confidential source, Outfit members Lombardo and Andriacchi have hidden ownership interests in the Rosebud Café. Andriacchi “held court” every Friday night at the original Rosebud. On one occasion the source overheard Andriacchi berating the owner of record of the Rosebud for his expenditure of Rosebud funds.²¹ Spina was also observed in June 2003 entering a vehicle with Andriacchi while carrying two or three manilla envelopes, and in September 2003 eating at a sidewalk café with Andriacchi.²²

In addition to Spina’s personal ties to Lombardo discussed above, several business connections between Lombardo and Spina were identified. Lombardo is alleged to have

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used his local political influence to assist Spina in being hired for a project for a France-based company building decorative bus shelters throughout the city. ²³

A former law enforcement officer very familiar with the Grand Avenue neighborhood reported that Spina was “an attractive investment front and operator for . . . Lombardo [and] Andriacchi because he has no arrest and/or criminal conviction history.” He claimed that Lombardo used Spina to invest in property in the Grand Avenue neighborhood that is worth millions of dollars, which Spina never could have afforded on a City salary.²⁴

1. C.           Conclusion

Based on the foregoing, Spina satisfies the standard relied upon by the IRB for determining whether an individual is an organized crime associate.

Ill.        WHETHER SYLVIA COZZO KNOWINGLY ASSOCIATED WITH ORGANIZED CRIME ASSOCIATE CHRIS SPINA

Given the conclusion that Spina is an organized crime associate, we now turn to whether Sylvia Cozzo engaged in prohibited association with Spina.

The prohibition against knowingly associating with an organized crime member or associate has three elements: (1) whether the individual alleged to be an organized crime figure is in fact “linked” to organized crime; (2) whether the association between the accused IBT member and the organized crime figure was “`purposeful and not incidental or fleeting;’^“ and (3) whether during the time period of the purposeful association the accused IBT member “knew of the organized crime ties of his associates.”²⁵

With respect to what constitutes purposeful associations with an organized crime ^associate, the IRB recognized that such contacts can be “in either a business or social

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context,” but had to be purposeful to be prohibited. For example, accidental meetings at a restaurant or incidental contacts at wakes or weddings were typically not considered prohibited contacts by the IRB.” To be prohibited, “associations need merely be `calculated<sup>‘</sup> or `conscious choices.^“27

1. Cozzo’s Contacts with Spina

Sylvia Cozzo described Chris Spina as “probably one of my closest male friends,” explaining that she has “know[n] him her whole life.”²⁸ Until he was retired from the City of Chicago in May 2003, she frequently saw him in the morning at La Roc’s restaurant where she went every morning before work.²⁹ Cozzo stated that she has been out to dinner with Spina, been to his home, he has been to her home for dinner and to visit, they have socialized at La Roc’s frequently, and Cozzo is very good friends with Spina’s wife. Cozzo explained that they have socialized for “[m]any years” and that “there’s a lot of history there,” as their “families . . . go back years and years.^“30

Spina was accused of falsifying his city pay records claiming overtime for time he had spent chauffeuring Outfit boss Joseph Lombardo.³¹ Cozzo was aware of the charge, but denied Spina was Lombardo’s driver. Instead, she claimed Spina had driven Lombardo around because he was a neighbor and a friend and that Spina grew up in a large, poor family and “Joe” helped Spina out over the years.³² She testified that Spina was “friends with,” not “[w]orking for” the Outfit.³³

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1. Cozzo’s Prohibited Association with Spina

1          Spina’s Link to Organized Crime

The first element under the IRB test that the individual alleged to be an organized crime figure be linked to organized crime is established by the evidence presented above demonstrating Spina’s frequent contact with organized crime members, including Lombardo and Andriacchi and his driving for Lombardo. Spina’s ties to other organized crime members and associates also support this conclusion.

2. Purposeful Association

The second element, that their contact be purposeful, is established by Sylvia Cozzo’s own testimony describing her close relationship with Spina and their frequent contacts spanning the last 40 years, reflecting a “conscious choice” by Cozzo to have regular contact with Spina after the 1989 Consent Decree and as recently as 2003.

3. Cozzo’s Knowledge of Spina’s Organized Crime Association

With respect to the third element, whether Sylvia Cozzo knew of Spina’s status, the evidence supports the conclusion that she had in her possession all the information necessary to conclude that he was in fact an organized crime associate. Sylvia Cozzo was aware of many news stories that linked Spina with organized crime, but did not believe them.³⁴ When questioned why, she explained that “I’ve seen stories of my father in the newspaper, and I live with my dad. And I could tell you they’re not true. That’s why I don’t believe what the newspapers tell me.^“35 Media about Spina was so prevalent that Cozzo and her friends would tease Spina to “ruffle his nerves,” telling him that they knew the headlines for the next day’s newspaper and claim that Spina’s “‘name is all over it.³⁶

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In addressing a case when a Teamster officer claimed not to know of his friend’s organized crime status despite media coverage about it, IA Lacey stated that, “‘[i]n the absence of direct evidence of knowledge of the organized ties of an associate, . . such knowledge may be inferred from the duration and quality of the association.^“’37 In that case, the evidence demonstrated that IBT official Theodore R. “Cozza and [organized crime associate] LaRocca were frequent companions and would visit each other regularly.”‘ Sylvia Cozzo’s contacts with Spina, which she candidly acknowledged, are likewise frequent, regular, and purposeful. They consisted of sometimes daily interactions and social contacts that span 40 years. When asked if she had heard of the Consent Decree, she responded that she had not. When asked if she had heard that Teamsters were prohibited from associating with members of organized crime, she responded, “No. I was  not aware of that,” but next added, “[w]ell, maybe I never really paid attention to it is, I guess, what I’m going to say.” Cozzo went on to explain: ” I grew up for 40 years … to tell me, ^‘You cannot talk to him no more,’ I find  that a little crazy. A lot of these papers claim that the people are associated with organized crime. . . . [T]o cut a friendship that I’ve had with people for 40 years, my family, I find that a little difficult. I mean, if that’s what you’re expecting from me.”³⁹

1. SUMMARY

In light of the foregoing, we recommend the filing of charges against Local 743 member Sylvia Cozzo for violating the IBT Constitution’s prohibition against knowingly associating with an organized crime associate.

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